Penrose and Wilcox are in partnership, sharing profits and losses in the ratio 3:2. The following information

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Penrose and Wilcox are in partnership, sharing profits and losses in the ratio 3:2. The following information was taken from their books for the year ending 31 December 2012, before the completion of their profit and loss appropriation account.

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(a) Prepare, for the year ending 31 December 2012: (i) the profit and loss appropriation account of Penrose and Wilcox; (ii) the current accounts in the ledger for Penrose and Wilcox.

(b) Why in many partnerships are current accounts prepared as well as capital accounts?

(c) At 1 January 2012 Penrose had a debit balance in his current account. What does this mean?

(d) In partnership accounts what is the purpose of preparing: (i) an income statement? (ii) a profit and loss appropriation account?

(e) In partnership accounts why is: (i) interest allowed on capital? (ii) interest charged on drawings?

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Frank Woods Business Accounting

ISBN: 9780273759287

12th Edition

Authors: Frank Wood. Sangster, Alan

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